Int'l Travel Recovering Unevenly

Growth in international travel in some sectors has surmounted the setbacks of destabilized economies and shaken traveler confidence, but in certain industry segments and parts of the world, it could be years before global travel returns to pre-Sept. 11 levels.

Europe and other overseas markets have revived relatively quickly, but travel from North America to other parts of the world remains fairly weak. Demand for global support from U.S. companies is strong, but buyers and travelers still are preoccupied with the costs and security issues involved in global travel (BTN, March 4). The largest travel management companies are remaking their global services to meet buyers' cost and safety concerns. Even as they do, however, they note that though traffic has risen, yields from international sales are down.

Many technology and manufacturing businesses have been slow to return to international travel, but other industries, such as banking, oil and gas have rapidly rebounded. "Some industries have recovered faster than others," said Jack O'Neill, president of St. Louis-based mega agency TQ3 Maritz Travel Solutions. "The technology business has been particularly slow to return to the air."

Other industries have recovered more quickly. Greg O'Neil, president of Synergi, a $12 billion global network of agencies, said business is picking up relatively quickly in several industries. "We're seeing a return to normal transaction levels in banking businesses, the consulting industry and oil and gas," O'Neil said. "We've had a surge in global RFIs and RFPs from those types of companies."

Truly global companies continue to travel internationally, albeit less frequently. Beryl Gibbs Roux, corporate travel manager for New York-based engineering behemoth Parsons Brinckerhoff, oversees 3,500 travelers in 120 offices around the world. "Our international travel has not picked up as quickly as domestic travel," she said, "but by virtue of the multinational nature of our business, people have to travel overseas. Videoconferencing is not a viable option when employees and clients want to meet face to face."

Companies that are taking advantage of the uncertain world economy by making overseas acquisitions are traveling internationally as much as ever. Connie Freeman, director of corporate procurement and travel services for Stamford, Conn.-based Pitney Bowes, said that overseas travel in January was actually closer to 2001 levels than domestic travel. "Our company has made some overseas acquisitions," she said. "This drives up overseas travel, but things are still definitely in flux."

Some foreign markets have recovered faster than North American overseas routes. Peter Morris, chief economist at Montreal, Canada-based International Air Transport Association, said, "In recent months, all roads leading to, from and through the U.S. were hit with a precipitous drop in volume. Since then, load factors have improved to the point where now they are back to where they were about a year ago, although in many cases airlines have reduced capacity.

"By next year, we should have the same number of people traveling as in 2000 on most routes," Morris said. "But it may be 2005 before routes between North America and Europe return."

Ian Epps, account manager for airlines at Parsippany, N.J.-based Galileo International, also said that some foreign markets have recovered faster than North American routes. "Many African and European carriers have performed relatively well for several months," he said, "but transatlantic routes have been slower to revive."

For the majority of American businesses, the recovery of international travel has lagged behind domestic travel. TQ3 Maritz's O'Neill said that foreign travel has been slower to revive than domestic has. "Within the U.S., we're back to within 12 percent of last year," he said. "Internationally, we're still 15 percent off last year's level."

And in response to the tight economics of the times, North American business travelers who are venturing overseas are spending less, said sources in the industry.

"Business travelers are now turning to low-cost carriers for international travel and some even using local carriers," Galileo's Epps said. "Corporate travelers never did that before costs became such a pressing issue."

Dan Green, president of New York-based Sea Gate Travel, said even corporations that are flying overseas as much as ever are spending less. "Transactions are not down as much as yields are," he said. "Many corporations have implemented policies that push international flyers to use economy class."

Even at corporations where international travel is recovering, costs and security remain troubling issues for managers. "At our organization, international travel has recovered relatively quickly because we view most of this travel as essential," said Linda Heath, corporate travel manager at New York-based American Bible Association.

However, Heath said that security is a growing concern among her international travelers, a sentiment she has countered by seeking expanded international agency support.

Ann Widay, travel analyst at San Diego, Calif.-based Qualcomm Corp., also said that global travel at her company is recovering, although she has implemented stricter approval protocols to cut down on spending. Simliar to Heath, Widay said security is a major concern for international travelers. To address those concerns, Widay created a new online resource for travelers. "We have what we call a Global Travel Guide housed on our company intranet," she said. "It's linked to our other company Web sites and contains information drawn from the U.S. State Department and the Centers for Disease Control, among other sources."

Travel management company executives have responded to buyer concerns with new services for managing international travel. The megas, in particular, are bullish on buyer demand for global services.

Wendy Gonzalez, vice president of sales at Philadelphia-based Rosenbluth International, said demand from travel managers was what prompted the agency to release its Global Security Suite in February. "People want to know where their associates are around the world," she said.

Gonzalez said delivery of global services still is a top priority among clients. "Our multinational bids have increased year over year by 8 percent," she said. "Probably three out of five of our new RFPs are multinational."

Pam Arway, executive vice president and general manager of American Express Corporate Travel, said, "We're seeing more and more evidence from our clients that they want to deal with us on a global level. That doesn't mean that they'll deal with American Express exclusively in every single country, but it does mean that they want to deal with American Express in a consistent manner in every country where we provide them service.

"Clients want to look at information in a uniform way, no matter where they are or where the information comes from," Arway continued. "We're really just following along an overall trend toward globalization that is happening in many industries. We're setting up our structure so globalization happens in a very easy and focused way for our customers."

Mike Woodward, the longtime American Express executive who just became vice president of account management for Minneapolis-based Carlson Wagonlit Travel, also said buyer demand for global services is growing. "Companies are desperately seeking ways to reduce their international air spend," he said. "I can't think of any company that is not thinking of building a global travel management system."

Despite the challenges of the current environment, Amex's Arway said, "I think the key to our operations this year is going to be the globalization of our business."